How to Save Money on Car Insurance in the UK

Last Updated on October 19, 2020 by Emma

 

The best way to consistently save money on your car insurance policy in my experience is to use a price comparison site every time your policy is up for renewal. The average price of a car insurance policy in the UK is £471 per year according to the Association of British Insurers (Q4, 2019 data), so the savings from shopping around can be significant.

But, using price comparison sites is not the only way to save money on car insurance in the UK. Read on for some more hints and tips!

Disclaimer: This article may contain affiliate links. If you decide to use them, my blog may earn a small commission at no additional cost to you, which helps to fund more helpful articles for you to enjoy. Nothing in this article constitutes financial, or other, advice. These are my views and the results of years of research, testing and learning.

 

Tips to Save Money on Your Car Insurance 

Use a Price Comparison Site

Hands down the easiest and most effective ways to save money on car insurance in the UK is to use a price comparison site. Simply complete one form, and the search engine will do all the work for you. The same applies for home insurance.

Some of the most popular car insurance comparison sites in the UK include:

• MoneySupermarket.com
• GoCompare.com
• Confused.com

For peace of mind, take the time to read your policy in full when you click through to the insurer’s website after using the comparison tool. That will allow you to spot any discrepancy between the cover requirements you selected on the price comparison site and what your policy covers.

Never Auto-Renew

When we are busy, it can be easy to ignore the notifications we get from insurance providers that tell us our policy is about to renew; as long as we have some cover it’s OK – right? WRONG! Auto-renewing is a big mistake that will see you paying over the odds every year until you take the time to compare your quotes.

Pay in Full

Generally a car insurance quotation will come with a couple of options; a monthly instalment plan or a payment in full amount. Check carefully to see what additional costs are in the instalment plan. Quite often you will pay far more this way.

If you don’t have the cash to pay in full this year, here are some other options:

• Pay using a credit card that has a zero % interest offer for the duration of the period you will need to pay off the insurance premium. Warning: if you struggle to have discipline with credit facilities and are likely not to repay the balance in full before it becomes interest-bearing, then consider avoiding this option. A credit card’s standard APR (annual interest) could cost you more than the insurance provider’s instalment plan.
• In future years, set a monthly budget that allows you to set aside the money to be able to pay your car insurance, and other expenses, in full to save money. You can see more tips to save money in my article Tips to Start Saving Money and to get out of debt in my article How to Pay off Debt Quickly: Top Tips.

Don’t Pay For Extras

When selecting your policy, the insurer will give you various ‘up-sell options’ such as legal cover, use of a complimentary car if yours is out of action, cover for your windscreen etc. While these services can be useful, challenge yourself on whether they are necessary for your circumstances, and only select the options that bring you peace of mind and the cover that’s essential for you.

Get Quotes for Different Excess Levels

Your excess on a car insurance policy is the amount that you will have to pay out of your pocket if you have an accident or need to use the benefits of your car insurance for any reason. In general, insurance providers will consider a higher excess as a lower risk and therefore, they are likely to charge you a lower premium.

If you’re using a comparison site, it may let you specify the amount of excess you can afford and give you quotations that factor this in.

Please don’t be tempted to specify an excess that realistically you don’t have the available to cash to cover.

Take Action to Reduce Your Risk

The factors that you input into your insurance application all impact your premium, for example, your occupation, where you will park the car and your mileage. It is illegal to fill in your details incorrectly, but sometimes you can take action that will reduce your premium. As an example, if you have a locked garage that you can park your car in daily, then you could see a reduction in your premium as a result. If you fit a car alarm, this may also reduce your premium; however, the cost of installing it could be more than your saving for the first year.

Fully Comprehensive Cover Might Be Cheaper

This point may sound counter-intuitive; sometimes the more comprehensive policies are cheaper than just covering your car for third party, fire and theft. This situation varies case-by-case, so it’s worth asking the price comparison site to model a couple of scenarios.

The reason behind this surprising situation is that in some cases the insurance provider may assume you are a higher risk driver if you opt for only third party cover.

Consider Checking Directly With Insurers Not on Comparison Sites

There are a few UK car insurance providers that choose not to offer insurance through price comparison sites. If you want to include them in your research, then it’s best to contact the following companies directly:

• NFU Mutual
• Aviva
• Direct Line

Consider a Policy That Covers all Cars in Your Household

If you are part of a multi-car household, then you may be able to save money but ensuring them all under one policy with a provider. Again, it’s important to do your research and see what scenario saves you the most money for the appropriate level of cover.

If you have a younger, higher-risk driver in your household, you will likely save money by initially having them as a secondary driver on a policy with a more mature driver as the named driver. However, this is only legitimate if the higher risk driver uses the car less than the named driver. Otherwise, this could be considered a type of insurance fraud.

Consider Car Insurance Prices When Buying a Car

When you are considering buying a new car, you can use a comparison site to get a quote for how much it will cost to insure each year. It’s wise to factor this, and the car’s maintenance and depreciation costs, into your buying decisions.

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Other Ways to Save Money on Your Car

While motor insurance is one of the top expenses you incur on a car, there are other ways to reduce your vehicle expenses.

Inflate Your Tires to the Optimal Level

If you read the manual for your car, you will find that the manufacturer has specified the optimal level to inflate your car tires. When you keep the tires at this level, you optimise the fuel efficiency of each car journey.

Drive at a Consistent Speed

When you are on a long journey on the motorway, you will use less fuel, the more smoothly you drive. Constant braking and acceleration tends to increase the amount of fuel that you use.

Keep on Top of Car Maintenance

If you or your partner are mechanically minded, then you can save a significant amount of money by learning how to do your own car maintenance; at least the simple stuff! If that’s not something that you are comfortable doing, then you could potentially swap skills with a friend or neighbour who is good at car maintenance. Perhaps you could do some babysitting for them, cook them a meal, or do some gardening.

Compare Fuel Prices

If you live in an area with multiple petrol stations, then it is worth comparing which pumps offer the best value for money. Just make sure that in the process of driving around, you don’t use more fuel than the price of the saving you’ll be making!

Buy Your Car Second Hand

One of the most significant ways to save money on your motoring is to buy a quality second car that has been through the majority of its depreciation already, and then hold onto it until it’s no longer cost-effective to do so. Save up and buy your vehicle for cash wherever possible to also avoid the costs of vehicle finance.

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How Have you Saved Money on Car Insurance?

What are your top tips for saving money on your car insurance?

Have you had good or bad experiences with price comparison sites?

We’d love to hear about your experiences.